Landing cost to measure Subsidiary embeddedness
Abstract:
One of the considerations for manufacturing transfers is the overall production cost gained from such location. Hence, foreign plants would compete for projects based on economic figures they are able to produce under the specific interaction of subsidiary capabilities and location characteristics. If HQ grants a mandate, it is expected that projected figures come true. However if production start-up delays or planned budget increases, it would impact not only on economic figures but also on future chances to gain new mandates. The purpose of this paper is to analyze the cost of landing and its relation with the degree of subsidiary embeddedness with the aim to highlight the need to convey efforts towards the embedding process. Cost of landing is defined as a function of the degree of experience on product/process technology, degree of lateral relations established and degree of subsidiary managers ‘voice’ inside corporate network. The paper suggest ‘experience on’, ‘embedding on’ and ‘acculturation to’ as transfer characteristics that impact on cost of landing.
Keytwords: Subsidiary embeddedness